Consumer sentiment in the U.S. jumped in early March to its highest level in 14 years, reflecting favorable assessments of current economic conditions, which also hit an all-time high.
The latest University of Michigan consumer sentiment index rose to a reading of 102.0 this month from 99.7 in February and 96.9 a year ago. It was the highest reading since January 2004, when the index registered 103.8.
Consumers' assessment of current economic conditions climbed to a reading of 122.8 in early March from 114.9 last month and the index of consumer expectations fell to 88.6 from 90.0.
Survey chief economist Richard Curtin said the monthly increase in the sentiment index was driven by households with incomes in the bottom third of the income distribution, while sentiment among upper income consumers declined due to their outlook for the economy and personal finances.
Curtin also said consumers continued to adjust their expectations in response to new economic policies.
"In early March, favorable mentions of the tax reform legislation were offset by unfavorable references to the tariffs on steel and aluminum — each was spontaneously cited by one-in-five consumers," he said.
Consumers' near-term inflation expectations also soared to their highest level in several years, and interest rates were likewise predicted to increase by the largest proportion since 2004, Curtin added.
"These trends have prompted consumers to more favorably cite buying as well as borrowing in advance of those expected increases," Curtin said.
